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Embattled Tech Companies Charge Deeper Into Health Care

Why should you trust companies that can’t seem to keep bots out of your news stream with sensitive medical data?

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Big tech has a lot of problems: fake news, sexual harassment, Russian interference, privacy concerns, and growing fears that too much screen time rots your brain. But even as they struggle to solve these day-to-day problems, the industry’s biggest players are putting more resources into another notoriously hard problem: health care.

Verily, a life-sciences unit of Google's parent company Alphabet, is reportedly seeking to break into a segment of health insurance called population health management. Apple is working to build the Apple Watch into a medical-monitoring device and establish its Healthkit as an industry-wide standard for health-data storage. In January, Amazon announced a partnership with JP Morgan and Berkshire Hathaway to lower health care costs for the companies' employees. Amazon is also rumored to be in talks to sell generic drugs.

On one hand, trying to solve problems that have vexed both industry and government for decades is the very definition of hubris. Why should you trust companies that can't seem to keep bots out of your news stream with sensitive medical data? But the tech companies wading into health care are trying to play to their strengths.

"Health care delivery is a big, ugly problem that companies in the industry have been unable to solve," says Erik Gordon, a professor at the University of Michigan Ross School of Business. "It might take companies that are better at innovation and less committed to protecting existing market shares and profit structures."

The key for big tech, Gordon says, will be cultivating a deep understanding of complicated health care issues. Dan D’Orazio, CEO of health-care-research firm Sage Growth Partners, agrees. He says he's seen many companies with great technology fail because they underestimated the complexity of health care industry problems. "We try to tell people that come in from outside that things don't necessarily translate well from other industries," he says.

Tech companies like Apple are known for creating products that people love. It’s easy to picture the industry creating a better health care experience for patients, and Apple is already hard at work designing new health products and finding new applications for its existing products. It’s researching ways to monitor blood sugar non-invasively and is working with Stanford University to test whether the Apple Watch could screen for irregular heart rhythms. This week, CNBC reported that the company will use new on-campus clinics for employees to test new health products.

But D’Orazio points out that many companies have created useful high-tech health-related products, ranging from secure messaging tools for doctors to communicate with patients to apps for tracking your health to tools for booking appointments online. But these companies often fail to gain traction.

The problem is that it's not enough to just make products that patients love. The products also need to be used by doctors, nurses, and administrators. For example, a company could create a great app for letting patients share their medical data with their doctors. But if the doctor can't access the data through software approved by her clinic, it won't help patients. Another problem: if doctors can’t easily track or bill for their time, they may not want to use an innovative app.

Digital-medical-record systems were supposed to make it easier for patients to take control of their medical data, and to share data between different clinics and hospitals. But different systems use different data formats, making it as hard as ever to transfer records from one medical provider to another. Worse, D’Orazio says medical software companies have no incentive to make it easier to move data from system to system, because that would make it easier for a clinic to switch to a competing software supplier.

Apple now enables you to use its Health app to download and view your medical records from certain hospitals and clinics, including Johns Hopkins Medicine in Baltimore and Cedars-Sinai in Los Angeles. That's great, D’Orazio says, but getting every medical provider onboard will be exceedingly difficult. The issue doomed similar projects, such as Google Health, which shuttered in 2011.

Tech companies are also trying to apply their skills in crunching massive amounts of data. Verily, formerly known as Google Life Sciences, has worked with French pharmaceutical giant Sanofi on diabetes treatment research, collaborated with University of North Carolina and Harvard on post-traumatic stress disorder research, and launched an ambitious health study called Project Baseline, which plans to monitor the health of 10,000 people for four years to establish a "baseline" picture of good health.

This week, CNBC reported that the company wants to work with governments, insurers, or companies to find ways to reduce health care costs. For example, Verily might try to spot patients who would benefit from preventive care measures that could avert more costly treatments later on. If the company finds places to slash costs, it would keep part of the savings. A Verily spokeswoman confirmed the company is looking into the market, but declined to comment on CNBC's report.

One challenge for Verily and other population health management companies is that medical data is incredibly messy, D’Orazio explains. Even within electronic medical records, much of the data is unstructured. Analyzing giant piles of messy data certainly sounds like an Alphabet-style problem. But it's not as simple as running Google's search algorithms on medical data.

Amazon’s health care plans are much less clear. The announcement of its partnership with Berkshire Hathaway and JP Morgan was sparse on details. Critics like Drew Altman, CEO of the Henry J. Kaiser Family Foundation, argue that the initiative might benefit only the companies’ employees. Separately, the idea of selling generic pharmaceuticals through Amazon or its Whole Foods stores might never come to fruition.

But D’Orazio thinks Amazon may have the best shot at changing the health care industry by leveraging its supply chain expertise. "Health care doesn't do supply chain, getting drugs and equipment where they need to be, as well as other industries," he says.

Many of the problems that the tech industry could solve for the health care industry might not yet be known. Don't expect Alphabet or Apple to remake health care overnight. But don't be surprised if the answers to at least some of the industry's problems lie in not in big pharma, but in big tech.

Big Tech Meets Health Care

Activity trackers increasingly are being marketed as medical devices, to help manage a variety of conditions.

Google sibling Verily plans to track 10,000 people for four years to establish a "baseline" picture of good health.